BUS 600 Foundation of Business Management assignment --Analyze Apple Inc. Financial Statement

In accounting there are three reports--balance sheet, income statement and cash flows. Those three reports tell us how the company is doing, making profit or loss and how the company is doing for its cash activities. Moreover, financial ratios tell us how healthy the company is.
According to Apple's balance sheet, for instance, Apple's current assets which is expected to convert to cash within one year including cash, short-term investments, accounts receivable--Apple provides the service to customers, but not receive the payments. Apple's inventories has $545 millions on June 28,2008 and is expected to sell the inventories for cash within one year. Deferred tax assets is an account prepaid tax which suppose to pay later day. Noncurrent assets include fixed assets used to operate the business but that are not for sale, such as property, plant and equipment. Goodwill typically reflects the value of intangible assets such as a strong brand name, good customer relations and good employee relations. Intangible assets include trademarks, copyrights and patents. Liabilities include current liabilities such as Apple's account payable has $3,683 millions on June 28, 2008 that has to pay to suppliers. Accrued expenses refers to an expense that has been incurred but not yet paid. Examples of accrued expense items might be interest,wages, and taxes. Shareholders' equity include Preferred stock, common stock, additional paid-in-capital, retained earnings, and treasury stock. For instance, Apple has retained earnings $12.7 billion on June 28,2008. It has over 1.5 times that amount in shareholders' equity ($19.6 billion). Therefore, the company is using shareholder's money effectively.
Apple's statements of operations which is income statement shows that net sales/Revenues earned by the company when it sells its products. Cost of sales/COGS is the costs that go into creating the products that a company sells. Revenues minus COGS can calculate a company's gross margin. Then, deducted expenses such as R&D, selling, and administrative plus other income and minus income taxes to get net income.
Apple's statements of cash flows include operating activities which changes made in cash, account receivable,depreciation,inventory and account payable are reflected in cash from operations. Changes in equipment, assets or investments relate to cash from investing. Usually cash changes from investing are a "cash out" item, because cash is used to buy new equipment, property, plant or short-term investments. Financing activities reports the issuance and repurchase of the company's own bonds and stock and the payment of dividends.

Apple Inc. margins of sales in 2007 gross margin was 33.97% and in 2008 was 34.31%. Profitability in 2007 net margin was 14.56% and in 2008 was 14.88%, return on assets in 2007 was 16.43% and in 2008 was 14.89%, return on equity in 2007 was 28.52% and in 2008 was 27.19%, inventory turnover in 2007 was 51.47% and in 2008 was 49.90%. Therefore, in 2008, Apple might require a large investments and in a product transition. Inventory turnover rate was lower than previous year which was good and healthy. Quick ratio and current ratio gave a sense of how readily the company could cover current obligations if the sales were to stop. Higher ratios indicate greater liquidity. For instance, Apple had 2.43 quick ratio and 2.46 current ratio in 2008. The financial statements and ratios show Apple Inc. is a very healthy and stable company. It is a good company for invest.